Stocks: The Tale of Two Covid-era Heroes

The stock market has experienced a remarkable year, with significant gains across multiple sectors. However, two notable Covid-era heroes have failed to keep up with this upward trend. Analysts believe that their fortunes might change in 2024.

Magnificent Seven vs. The Rest

While the S&P 500 has grown by over 24% since the beginning of the year, and the Nasdaq Composite has seen a staggering 44% increase, the rally in 2023 can largely be attributed to the success of seven tech giants - Apple, Amazon, Alphabet, Meta Platforms, Microsoft, Nvidia, and Tesla. Consequently, many other individual stocks have struggled to match the double-digit surge of the overall S&P 500.

Moderna and Pfizer: The Underperformers

Among the underperformers, Moderna and Pfizer have fared particularly poorly in 2023, with their stock prices falling by 44.8% and 44.2%, respectively, as of Tuesday's closing. This places them as the second and third-worst performing stocks in the U.S. market, among companies with market capitalizations exceeding $20 billion. Dollar General holds the dubious honor of being the worst performer, with its stock price experiencing a 45.4% decline.

It is crucial to note that these declines follow the remarkable gains made by both Moderna and Pfizer during the pandemic. By offering highly sought-after Covid-19 vaccines, Pfizer shares doubled between March 2020 and the end of 2021, while Moderna witnessed an astonishing growth of approximately 800%.

"What Have You Done for Me Lately?"

However, Wall Street has a reputation for being relentless and constantly seeking new successes. Unfortunately for Moderna and Pfizer, their performances in 2023 have been lackluster, with earnings per share shrinking considerably compared to the vaccine-boosted performances of previous years.

Promising Outlook for Moderna and Pfizer Stocks

Analysts believe that investors should not overlook stocks like Moderna and Pfizer. Out of the twenty-four analysts covering both companies, half of them have given a Hold-rating or the equivalent to Moderna. Similarly, 58% of analysts have been on the sidelines with regards to Pfizer. Surprisingly, the average analyst price target for Moderna stock is $125.24, suggesting a potential upside of nearly 29% from its current levels. On the other hand, Pfizer stock is anticipated to have a 10.6% upside to reach the average analyst price target of $31.42.

In contrast, Dollar General, one of this year's big-cap losers, has received a majority of Hold ratings from analysts. Their price targets indicate a gain of less than 2% for the stock.

Two other major companies with market capitalizations over $20 billion, Estée Lauder and Illumina, are forecasted to experience a decline of 9.2% and 1.9% in their respective share prices if they reach analysts' average price targets.

While some investors question the reliability of analysts' price targets, often considering them overly optimistic or reactive, there is a group of strategists who foresee double-digit gains for Moderna and Pfizer stocks. This may provide reassurance for those who have observed the significant declines in these stocks in 2023.